In a landmark decision, the United States Senate has passed a resolution to overturn a ban preventing banks from offering cryptocurrency custody services, marking a significant step for crypto supporters despite a looming presidential veto.

Senate Challenges SAB 121

On Tuesday, the Senate voted to repeal Staff Accounting Bulletin 121 (SAB 121), an SEC-issued guideline that critics argue effectively prevents banks from providing crypto custody services by making it financially impractical. The bulletin, issued two years ago, offers accounting guidance for publicly traded banks on safeguarding customers’ crypto assets.

The vote saw a clear partisan divide, with all Republicans and a select group of Democrats supporting the repeal. House Rep. Tom Emmer (R-Minn) described SAB 121 as an overreach by SEC Chair Gary Gensler, claiming it reflects a bias against the digital asset ecosystem.

Legislative Progress Amid Opposition

The resolution, H.J.Res.109, had already passed the House of Representatives with a 55% majority before achieving a 60/38 split in the Senate. The bipartisan support in the Senate, including votes from influential Democrats like caucus leader Chuck Schumer (D-NY), reflects a growing congressional discontent with the SEC’s approach to crypto regulation.

However, the resolution did not achieve the two-thirds majority required to override a presidential veto. President Joe Biden has vowed to veto the resolution if it reaches his desk, casting doubt on the immediate future of crypto banking in the U.S.

Impact and Reactions

Despite the anticipated veto, crypto advocates see the Senate vote as a positive signal. Caitlin Long, CEO of Custodia Bank, suggested that the vote could influence regulatory agencies' behavior, providing internal dissenters within the SEC with political support to push back against aggressive enforcement actions.

On the other side, Senator Elizabeth Warren defended SAB 121, arguing that it ensures banks disclose the risks associated with crypto custody services, which she views as a necessary consumer protection measure.

Historic Legislation

The resolution represents the first purely crypto-focused legislation to pass through both chambers of Congress, underscoring the growing political attention to digital asset regulation. While President Biden's veto could stall immediate changes, the Senate vote highlights a significant shift in congressional attitudes towards cryptocurrency and signals potential future legislative battles over the regulation of digital assets.